An accountant and co-accused has provided written testimony of how Princess Cristina's husband allegedly creamed off millions of euros

A key suspect in the fraud case that has embarrassed Spain's royal family has given the first direct account of how King Felipe VI's brother-in-law allegedly embezzled millions of euros of public funds.

Marco-Antonio Tejeiro, an accountant, set out his claims in a detailed written statement to the Spanish court where Inaki Urdangarin, the husband of Princess Cristina, the king's sister, faces accusations of fraud.

The scandal, subject of a four-year investigation by a judge in Palma de Mallorca, soured the reign of former King Juan Carlos, who tearfully handed the crown to his son last month.

Mr Urdangarin, 46, a former Olympic handball player, is accused along with a former business partner, Diego Torres, of creaming off €6 million (£4.76 million) in public funds from contracts to stage events that were awarded to Noos, a supposedly non-profit foundation, partly because of his connections.

Mr Tejeiro, who was Noos's accountant, is to receive a lighter sentence for cooperating with prosecutors, according to a court source,

"The profit that should have been pooled within the Noos Institute was not used for the ends and means of the association but was transmitted to the private companies of Messrs Torres and Urdangarin," he said in the testimony, which was obtained by the AFP news agency.

Noos issued false bills to regional governments whose sole purpose was to enable Mr Torres and Mr Urdangarin to "share out the profits" and divert them into their own companies, Mr Tejeiro said.

Further, the accountant said he knew of "simulated" employee contracts in Noos and a related firm Aizoon, accusing the two men of pocketing the money supposedly used to pay those wages.

He said the two men "led the group as its bosses, having absolute control and decision-making power over it", and did not implicate Princess Cristina, who on Wednesday appealed against the tax fraud and money-laundering charges she herself faces.

Lawyers for the princess are seeking to overturn a June 25 ruling by investigating judge Jose Castro, which upheld charges against her related to Mr Urdangarin's business dealings. That ruling was the penultimate step towards a possible trial.

In February the princess, a mother of four with a master's degree from New York University, said she had simply trusted her husband and had no knowledge of his business affairs.